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Monday, July 26th, 2010
1:05pm (EST)
We mentioned in our Weekly Wrap that the bulls could test the upper end of the recent trading range and they got a couple of golden nuggets this morning to fuel the rally. If you missed the charts from Sunday afternoon, check them out again and you will see how close the bulls are pushing resistance. The one thing we want you to take away from the Weekly Wrap is this:
“We have been seeing 1% moves in a choppy market but now we are starting to see 2%-3% moves, and on a weekly basis, 4%-5% swings. This is telling us something and it could mean we are going to see even bigger price swings in the weeks and months ahead.”
As far as today’s action, sales of new homes jumped last month although it was the second-weakest month on record. New home sales rose to 330,000 in June from May’s revised reading of 267,000, which was nearly a 25% increase. Sales for April and March were also revised downward but the news was better-than-expected.
In corporate news, FedEx (FDX, $83.12, up $4.16) gave the bulls a boost after raising its earnings forecast for the quarter and rest of the year. The company said they were seeing more volume than anticipated in the current quarter and lifted their range to $1.05-$1.25 from a prior range $0.85-$1.05. For the full year, FedEx estimated earnings of $4.60-$5.20 a share, up from a prior view of $4.40-$5.
FedEx looks cheap at these levels and its 52-week high is $97.75. However, we would like to see more volume here in the U.S. before jumping on the bandwagon. We played FedEx earlier this year on the way up and at some point late this year or early next, FedEx will be a $100 stock. We just don’t think today’s news will propel it to new highs over the near-term.
Biotech has gotten hot again and there are a number of names on the move as M&A rumors pick up. Genzyme (GENZ, $66.83, up $4.31) is up another 7% today, adding to Friday’s breakout move from $54 to $62, on takeover chatter. There is speculation that Sanofi Aventis (SNY, $29.61, up $0.26) is looking to acquire Genzyme and there are others that could join the race to get this prized jewel.
As we head to press, the Dow is enjoying a 60 point pop, or 0.6%, and is at 10,484. The S&P 500 is up 9 points, or 0.8%, and is at 1,111. Meanwhile, the Nasdaq is showing a 16 point pop, or 0.7%, and was last seen trading 2,285.
We are watching the 1,110 level on the S&P 500 as a sign to see if the bulls will push 1,125. There are layers of technical resistance from here on up and the bears are still holding the fort down but this clears the way for a test higher.
As volatility picks up, we should get the break we are looking for and we are ready to pounce. While it may appear the bulls are ready to ride the rocket ship again, we remain cautious to the downside. However, we have both call and put options on our Watch List so we will be ready either way. Subscribers, check for the important updates in the Members Area.
Tags: call options, FDX, FedEx, GENZ, Genzyme, how to trade options, momentum options trading, Momentum stocks, option picks, option stock picks, options alerts, options newsletter, options track record, put options, stock options trading, volatile options
Posted in BioTech, Company Commentary, Earnings, Market Analysis, Market Commentary | Comments Off
Wednesday, June 16th, 2010
1:20pm (EST)
The bulls are taking a breather from yesterday’s strong rally, and the bears are trying to recover. The market has traded lower for much of the session but did venture into positive territory earlier in the day. There is a bunch of headlines news, some good and some bad, and we will try to cover a few of them with today’s update.
In economic news, we mentioned this morning Housing Starts were down 10% and came in at 593,000 units versus estimates for 650,000. Elsewhere, Industrial Production increased 1.2% in May, while the capacity utilization rate came in at 75%. The Producer Price Index dropped 0.3% month over-month in May versus expectations of a 0.5% decline.
International Game Technology (IGT, $18.56, down $1.03) is getting a 55 haircut after Goldman Sachs (GS, $137.58, up $0.68) downgraded the stock to “Sell” from “Neutral”. Goldman downgraded its price target from $21 to $17 after seeing no improvement in slot machines sales until 2012. Casino stocks have been rallying, but the news is not all good for the sector.
FedEx (FDX, $80.47, down $2.54) is down 3% after telling Wall Street it earned $419 million, or $1.33 a share compared to last year’s loss of $876 million, or $2.82 a share. Analysts were looking for of $1.32 a share. Revenue was up 20% to $9.4 billion which was higher than the forecasts of $7.9 billion, on average.
In IPO news, CBOE Holdings (CBOE, $32.51, up $0.02) is slightly higher in its second day of trading as a public company. Shares of the largest U.S. options market closed at $32.49 yesterday after pricing at $29 a share late Monday.
IPO’s can be fun, and some of them can be lucrative investments, Google (GOOG, $503.28, up $5.29) always comes to mind of course, but premium brand names can often be priced pretty fairly based on future growth. CBOE Holdings has that and we will likely be playing options on this stock at some point. We have added the stock to our Watch List, but the options haven’t started to trade, yet.
Although CBOE is a new issue, be careful of buying this one as there is already litigation risk ahead. In early July, a court will decide if CBOE can continue licensing some of its higher margin products that they have exclusive rights to, and the SEC (Securities and Exchange Commission) is thinking of placing fee caps on them.
CBOE makes one-third of its transaction fees from these proprietary index options that they own rights on and their revenues would take a hit if others are allowed to join the party.
As we head to press, the Dow is off by 16 points to 10,388 while the S&P 500 is lower by a point and is at 1,114. The Nasdaq is flat at 2,306.
We will be back in the morning with another full update.
Tags: CBOE Holdings, FDX, FedEx earnings, GOOG, GS, IGT, initial public offerings, IPOs, momentum options trading, option picks, options alerts, stock options trading
Posted in Earnings, IPOs, Market Analysis, Market Commentary | Comments Off
Wednesday, June 16th, 2010
9:00am (EST)
Tuesday was a big day for the bulls and the market, overall, after the latest rally pushed the major indexes past current resistance levels. There were a number of positive catalysts the bulls used to run the market higher, and now that they are king of the hill again, it will be interesting to see how things shake out. More on that in a minute.
There has been tremendous pressure on the euro, but debt offerings in Spain and Ireland went rather well yesterday ahead of the U.S. markets opening. This propelled futures higher, and from there the bulls took over. The euro traded to $1.234 after falling to a four-year low of $1.188 last week and could trade back up to $1.25 over the short-term.
In economic news, the New York Fed’s Empire State manufacturing index rose to 19.6 as regional manufacturing expanded for an 11th straight month. Meanwhile, U.S. import prices slipped 0.6% in May. A 1.2% decline had been expected which means inflation remains relatively in check.
Tech got a big boost after a research firm raised their forecast for personal computer shipments for 2010. Shipments are now expected to come in up 20% after a recent forecast of a 15% increase made in April. Microsoft (MSFT, $26.59, up $1.09) and Hewlett Packard (HPQ, $47.98, up $1.10) jumped 4% and 2%, respectively.
After all was said and done, the Dow managed to post a gain or 215 points, or 2.1%, to settle at 10,404. All 30 stocks that make up the index finished in the green as the index closed above its 200-day moving average (MA).
The Nasdaq soared a whopping 62 points, or 2.8%, and settled above its 10 and 20-day MA’s while closing at 2,305. However, the index failed to break its 200-day MA.
The S&P 500 added 26 points, or 2.4%, and finished at 1,115. This index was our main focal point as we were watching the 1,100 level. More specifically, the 200-day MA stood at 1,108 and that has been cleared.
So now what?
To start, let’s just say the bears have been caught with their pants down. However, there are a couple of things to keep in perspective. First, volume was low once again. Trading volume on the Big Board was under 1.2 billion shares, which the average over the past 50 trading sessions has been 1.5 billion shares. Second, although the technical indicators may have changed the fundamental outlook for the market remains weak.
Resistance levels can be “stretched” but the S&P’s strong move could lead to a rally that takes the market back towards its April highs. The key for the bears will be Friday’s option expiration of the June contracts and next week traders will be placing short-term bets on the July options. This could lead to even more volatility.
In economic news this morning, May housing starts were down 10% and May building permits came in down 5.9%. Both numbers were worse-than-expected. FedEx (FDX, $53.01, up $1.54) beat earnings estimates this morning, but shares are at $80 in pre-market trading after the company offered a disappointing outlook.
Dow futures are lower by 60 points to 10,272 while the S&P 500 futures are off by 7 to 1,101. Nasdaq 100 futures are down 13 to 1,880. Subscribers, check the Members Area for the trade updates.
Tags: FDX, FedEx earnings, Microsoft, momentum options trading, MSFT, option picks, options alerts, stock options trading
Posted in Earnings, Economic News, Trading Psychology | Comments Off
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FedEx (FDX), New Homes Sales Lift Market
Monday, July 26th, 2010
1:05pm (EST)
We mentioned in our Weekly Wrap that the bulls could test the upper end of the recent trading range and they got a couple of golden nuggets this morning to fuel the rally. If you missed the charts from Sunday afternoon, check them out again and you will see how close the bulls are pushing resistance. The one thing we want you to take away from the Weekly Wrap is this:
“We have been seeing 1% moves in a choppy market but now we are starting to see 2%-3% moves, and on a weekly basis, 4%-5% swings. This is telling us something and it could mean we are going to see even bigger price swings in the weeks and months ahead.”
As far as today’s action, sales of new homes jumped last month although it was the second-weakest month on record. New home sales rose to 330,000 in June from May’s revised reading of 267,000, which was nearly a 25% increase. Sales for April and March were also revised downward but the news was better-than-expected.
In corporate news, FedEx (FDX, $83.12, up $4.16) gave the bulls a boost after raising its earnings forecast for the quarter and rest of the year. The company said they were seeing more volume than anticipated in the current quarter and lifted their range to $1.05-$1.25 from a prior range $0.85-$1.05. For the full year, FedEx estimated earnings of $4.60-$5.20 a share, up from a prior view of $4.40-$5.
FedEx looks cheap at these levels and its 52-week high is $97.75. However, we would like to see more volume here in the U.S. before jumping on the bandwagon. We played FedEx earlier this year on the way up and at some point late this year or early next, FedEx will be a $100 stock. We just don’t think today’s news will propel it to new highs over the near-term.
Biotech has gotten hot again and there are a number of names on the move as M&A rumors pick up. Genzyme (GENZ, $66.83, up $4.31) is up another 7% today, adding to Friday’s breakout move from $54 to $62, on takeover chatter. There is speculation that Sanofi Aventis (SNY, $29.61, up $0.26) is looking to acquire Genzyme and there are others that could join the race to get this prized jewel.
As we head to press, the Dow is enjoying a 60 point pop, or 0.6%, and is at 10,484. The S&P 500 is up 9 points, or 0.8%, and is at 1,111. Meanwhile, the Nasdaq is showing a 16 point pop, or 0.7%, and was last seen trading 2,285.
We are watching the 1,110 level on the S&P 500 as a sign to see if the bulls will push 1,125. There are layers of technical resistance from here on up and the bears are still holding the fort down but this clears the way for a test higher.
As volatility picks up, we should get the break we are looking for and we are ready to pounce. While it may appear the bulls are ready to ride the rocket ship again, we remain cautious to the downside. However, we have both call and put options on our Watch List so we will be ready either way. Subscribers, check for the important updates in the Members Area.
Tags: call options, FDX, FedEx, GENZ, Genzyme, how to trade options, momentum options trading, Momentum stocks, option picks, option stock picks, options alerts, options newsletter, options track record, put options, stock options trading, volatile options
Posted in BioTech, Company Commentary, Earnings, Market Analysis, Market Commentary | Comments Off